Results of EP Infrastructure Group for the year ended 31 December 2019
9. 4. 2020
We are pleased to confirm that in the year ended 31 December 2019, EP Infrastructure, a.s. (“EPIF”) and its subsidiaries (collectively the “Group“) continued to successfully operate their traditional energy infrastructure assets in Central Europe. The Group’s core activities remain the transmission, distribution and storage of natural gas, the distribution of electricity and district heating.
The Group owns and operates:
• the gas transmission pipeline through Slovakia, one of the largest corridors for supplies of Russian gas to Western, Central and Southern Europe;
• the distribution network of natural gas in Slovakia;
• the electricity distribution network in Slovakia as one of the country’s three main distributors of electricity;
• the largest gas storage capacities in Central Europe and significant gas storage operations in Bavaria, Germany; and
• major heat distribution networks and heat production plants in the Czech Republic and Hungary.
The core operations of the EP Infrastructure Group (“EPIF”) reported considerable improvement in 2019. EBITDA and Adjusted EBITDA reached EUR 1,611 million and EUR 1,606 million, respectively, for the year ended 31 December 2019, which represents an increase in Adjusted EBITDA of EUR 140 million (+10%) compared to the year ended 31 December 2018.
The improved performance measured by Adjusted EBITDA was primarily driven by the gas transmission segment which experienced growing volumes of transmitted gas (to certain extent frontloading effect from 2020 due to expected potential Russian – Ukrainian crisis which has not however materialized as a new gas transit agreement was closed between respective parties in December 2019) and two acquisitions towards the end of 2018 – gas storage facilities in Bavaria operated by NAFTA Speicher and controlling minority share in Plzeňská teplárenská which operates cogeneration heating plants and the heat distribution network in Pilsen. This was accompanied by improved results in the gas distribution business owing to increased capacity bookings as well as to higher EBITDA in the existing gas storage business driven by favorable winter-summer spreads and full storage capacity.
The Group also generated Adjusted Free cash flow of EUR 1,107 million for the year ended 31 December 2019, an increase of 8% on the year ended 31 December 2018, mainly driven by the aforementioned EBITDA improvements.
Alongside delivering on business results, the Group has continued to optimize its capital structure. EPIF benefited from the market conditions through several bond issuances, extending its maturity profile and reducing cost of its borrowings. After issuance of international eurobonds of EUR 600 million in July and EUR 500 million in October, the Group refinanced EP Energy bonds of EUR 496 million on the EPIF level. As a result, approximately 70% of the overall proportionate Group debt is located on EP Infrastructure level. The Group’s Proportionate net leverage ratio of 3.9x as at 31 December 2019 confirmed the Group’s commitment to a stable and predictable capital structure and remained in line with and indeed well below the net leverage target of the Group.
In conclusion, the Group again proved its role as a leading infrastructure player in the Central European region. Filip Bělák, EPIF’s Finance Director, stated that “EP Infrastructure Group strategy of predictable and stable returns based on a diversified Group structure of regulated or long term contracted business’s remains in place. Results in 2019 are particularly pleasing as successful M&A activity at the end of 2018 was supplemented with operational improvements in our existing businesses. At the same time, it is necessary to expect that some of the positive effects are due to front loading of operational performance from 2020, this is particularly valid for the gas transmission segment.”
Since the beginning of March 2020, the EPIF Group has concentrated its efforts on mitigating the impact of COVID-19 outbreak, particularly in the area of health and safety. The key implemented measures included distribution of adequate protective equipment to on-site employees and remote working for staff whose on-site presence is not essential. Continuity of commodity supplies and other essential services for our customers is ensured through special separation regime for personnel working in critical infrastructure, such as dispatchers.
In light of the current COVID-19 outbreak, Gary Mazzotti, Vice Chairman of the EPIF’s Board of Directors, commented that “despite the apparent impact of the pandemic on overall short-term economic activity, we do not expect our performance to be materially affected in the long run. The resilience of our operations is underpinned by largely regulated or contracted revenues, extraordinary cash conversion ability, strict control over counterparty risk and sufficient committed revolving credit lines.”
For more details on the results, as well as the financial indicators used, please refer to https://www.epinfrastructure.cz/en/investors/results-centre/.
Full release here.